“Podcasting” is a term that’s so old it refers to a device you can’t even buy anymore.
But it’s outdated for another reason, says podcast executive Chris Balfe: The line between traditional podcasts — delivered via audio files — and TV talk shows delivered over the internet — has basically collapsed, and now they’re all the same thing.
That’s why Netflix has been investing in exclusive podcast deals — it thinks they are a low-cost way to bulk up its video offerings. And it’s why the biggest buzz in podcasting right now is around “clipping” —chopping up longer podcast interviews and distributing them in bite size to video platforms like TikTok and Instagram’s Reels.
But Balfe, whose Red Seat Ventures provides production services and ad sales for podcasters or whatever you call them, like Tucker Carlson and Megyn Kelly, doesn’t love the idea of Netflix getting exclusive rights to podcasts. And he’s strongly against the idea of his talent willingly turning their long-form interviews, which generate revenue for them, into clips that generate zero revenue for the creators — even as he acknowledges that many of his podcasters want to do that, anyway.
I periodically check in with Balfe, who sold Red Seat to Rupert Murdoch’s Fox Corp. last year. to get a front-line report on his industry. You can listen to our most recent conversation on my Channels podcast, which includes a discussion of what life is like inside Fox these days. The following is an edited excerpt of our conversation:
Peter Kafka: Netflix has been paying podcasters to put their shows exclusively on Netflix and take them off of places like YouTube. Do we know if this is working for Netflix, and for the podcasters?
Chris Balfe: Let me preface this by saying these guys built a $300 billion business and I didn’t, so they’re pretty smart: I hate it.
I hate it for creators, and I hate it for Netflix. For creators, the whole appeal of the creator economy is controlling your own destiny and distribution.
There’s no reason to believe if you have 10 million YouTube channel subscribers and you come off, when you go back on, that channel will still be active. You’re taking a huge risk there.
I also think it’s bad for Netflix. I know they’re in a race with YouTube — or they think they are — but I just don’t see how taking something that was free on YouTube yesterday and making it paid on Netflix today creates any value for subscribers.
The argument would be: If you are a big Barstool fan, for instance, and those guys do a Netflix deal, it’s very likely you have Netflix, so it’s not a big deal. And the other part of the equation is that there’s many more people in the world who have not encountered Barstool, and they are Netflix subscribers, so it will increase your audience.
Is that playing out?
There are anecdotal reports, kind of circulating behind the scenes, that the engagement isn’t that high. I think it’s too early to tell.
Not everyone is taking a Netflix deal. What kind of numbers are people walking away from?
Big numbers. For top talent, they have a lot of places that will give them a lot of money, right? Including me, and Netflix, and Spotify, and SiriusXM. So if you’re sitting there with a big show that has a lot of competitive bidders, Netflix is just another competitive bidder in that scenario. And thinking about what you’re giving up short-, medium-, and long-term to go there is a big consideration. Independence, around not controlling your own destiny, and around potentially killing your YouTube channel are, are serious.
The idea that YouTube was a place to consume podcasts was novel for a lot of people until recently, because people didn’t think of podcasts as something you watched. How much of your business is audio revenue vs. video revenue today?
Even in the 18 months since we last talked, it’s changed a lot. We’re seeing shows now that are historically audio shows that are now 50-50 audio-video. And we’re seeing a whole set of creators that have traditionally been video creators that are adopting a bit more of a podcast-like business model and hoping for the consistency that podcast deals bring.
Does “podcast” eventually just become synonymous with video?
We’re pretty much already there. We just say it’s a show now. “Podcast” is an archaic term.
I wanted to ask you about clipping. On the one hand, it’s a thing people are newly interested in talking about. On the other hand, the idea of taking a long-form piece of content and cutting it up and distributing it on other platforms is not a new idea.
It’s sort of hilarious. The short-form video marketplace last year was over $100 billion: $50 billion with Meta and then YouTube, Snapchat, TikTok, adds up to the rest of it. It’s a massive, massive business. And I think media companies and creator economy companies have made a big mistake here: They’ve allowed the economics of those things to be transferred to the tech platforms rather than living with media companies and creators.
Explain what “moving the economics to those platforms” means.
If we have a podcast business where we have a long-form piece of content, we distribute it to Apple, Spotify, YouTube, and elsewhere; we sell ads in it; we make money, the creator gets the majority of that money.
If the same interview gets clipped and uploaded to TikTok, we make essentially zero.
TikTok and Instagram share zero ad dollars with creators. YouTube remains the only platform that consistently shares ad revenue.
Exactly. Not only that, but YouTube makes it so that we’re the ones who can monetize our content if we choose to do that, and allows us to block [our content that someone else uploaded]. And yet with all these new platforms, I’m just as likely to see a “Call Her Daddy” clip from “Call Her Daddy’s” account as I am from a random account.
By not fighting the copyright battle and by also not fighting really at all to get media companies and creators paid for clips, we’ve taken a massive, massive amount of dollars for our content and just said, “Here, Meta, here TikTok, you take this money.”
The platforms’ answer is “Look at all this exposure you’re getting on our platforms.” Isn’t there some validity to that?
Of course, for sure. And that’s why talent in particular is very sensitive to us cracking down on the clipping economy. They know that when people say, “I saw that interview you did with so and so,” oftentimes they mean they saw it on Reels.
And for talent, that’s interesting, as long as it doesn’t really hurt their core business. Some are making, you know, $5 million, $10 million, $50 million a year. So maybe they’re not that upset about the clipping.
But I think that as clipping eats more and more of the economy, and short-form video goes from 100 billion to 300 billion or whatever it becomes, we could potentially see dollars shift from the long-form, where we’re trying to sell it on behalf of the talent, and have that giant sucking sound go in favor of the platforms.
What happens when you tell your talent, “We think clipping is a bad idea?”
I don’t even say that. I say that “the risk is that more dollars continue to flow to short-form platforms, and I don’t think we’re seeing this huge discovery lift.” And I think in most cases, talent says, “I’d still rather see myself out there in all these different places and be exposed to all these different people and stay in the conversation.”
I’m not discounting those things. I just think you have to weigh those two things: What’s the exposure vs. what’s the dollars? And me being a crass capitalist pig, I’m much more in favor of less people knowing you and you making more money.
